The Portland City Council has enough votes to pass a proposal that would increase funding for affordable housing in the city’s urban renewal areas.

In a press release Friday, Mayor Charlie Hales said he expects the council will vote in early November to increase the amount of urban renewal dollars earmarked for affordable housing from a minimum of 30 percent to a minimum of 45 percent.

That will add $66.7 million to the city’s affordable housing budget over the next 10 years, enough new funding to build more than 600 units of affordable housing.

“This declaration of a state of emergency isn’t just words, it’s real dollars that are going to build real affordable housing that’s going to be around for decades, and I’m very proud of it,” said Hales.

In Portland, urban renewal districts are funded using bonds backed by a slice of local property taxes, a strategy called tax increment financing, or TIF.

In 2006, the City Council decided to set aside 30 percent of TIF funds for affordable housing. The other 70 percent pays for improvements to streets, parks and infrastructure.

Mayor Charlie Hales (right) announces a new mixed-use development in Northeast Portland, with Commissioner Dan Saltzman.

Rob Manning/OPB

The new proposal falls short of the 50 percent earmark the Portland Housing Advisory Council and the faith coalition Metropolitan Alliance for Common Good have pushed the City Council to adopt.

That would have generated an additional $90 million to fund housing over the next decade.

But in a work session last week, council members Steve Novick and Amanda Fritz raised concerns that shifting urban renewal dollars to housing would undermine the city’s commitment to improve parks and streets in east Portland’s urban renewal districts, including Gateway and Lents.

Hales agreed to 45 percent as a compromise. He said it allows the city to preserve other important projects in the urban renewal districts.

“In Lents, there’s a need for a lot of neighborhood improvements and market rate housing the community has planned on for years,” he said. “In Gateway, we need to build a bunch of streets, because it was a very suburban neighborhood design, shopping strips and big lots, and that’s going to cost money.”

Commissioner Fish said he had pushed for the full 50 percent housing earmark, but described the compromise deal as a win.

“We’ll be targeting the dollars to the lowest income families in need,” said Fish. “And we’ll be front-loading the money, meaning we will be able to get dollars out of the door more quickly to meet the challenge in our community of an inadequate supply of affordable housing.”

The areas that will see the greatest investment in affordable housing with the new 45 percent earmark are North and Northeast Portland and the Pearl District.

The Gateway, Interstate, Lents, and North Macadam Urban Renewal Districts will also be affected.

TIF is Portland’s primary local funding source for affordable housing projects; it accounts for 78 percent of the local funding for affordable housing, according to the Portland Housing Bureau.

But by law, TIF funding can only be spent within the boundaries of Portland’s urban renewal areas. That includes less than 15 percent of the city’s area, and leaves out many neighborhoods with rapidly rising rents.

Both Hales and Fish acknowledged that TIF funding on its own cannot guarantee an adequate affordable housing supply in Portland.

“No one should believe this is enough,” Hales said. “Efforts to come up with a long term source of funding for affordable housing beyond (TIF), that covers the whole city or the whole metropolitan area, those are still good ideas that should be pursued.”

“We don’t have a better tool right now,” said Fish, citing Oregon’s statewide ban on inclusionary zoning and declining federal funding for housing. “It is the best of a difficult hand.”